Secretive inquiry found NSW insurance regulator contributed to trauma of injured workers

A secretive inquiry into the NSW insurance regulator has recommended making substantial financial payouts and issuing personal apologies to a group of injured workers after finding it seriously mishandled their cases and added to their trauma.

As Treasurer Daniel Mookhey prepares to front a snap parliamentary inquiry into the government’s controversial workers’ compensation reforms, the Herald can reveal that SIRA (State Insurance Regulatory Authority), the agency set up to regulate the state’s insurance scheme, has admitted contributing to psychological injuries.

Sharni Sinclair is one of several injured workers whose case was subject to a special inquiry into the conduct of insurance regulator SIRA.Credit: Edwina Pickles

Details of the payments remain a tightly held secret, but the Herald understands they were recommended a special inquiry run by Alan Robertson SC, a former Federal Court judge appointed by the Customer Services Minister Jihad Dib to investigate three “ongoing and long-running cases” in the scheme.

It was later expanded to include at least three other cases. The government has yet to release the Robertson report despite receiving it in December.

While multiple sources said Robertson had recommended significant monetary payments and apologies to people whose workplace psychological injuries were exacerbated by the regulator, many of the participants have grown frustrated at the failure to update them on its findings.

One of the people who made submissions to the inquiry was Sharni Sinclair, a former NSW Legal Aid lawyer whose insurer accepted provisional liability for a serious psychological injury before revoking it in June 2024, two days after she had been released from psychiatric inpatient care at a private hospital following a suicide attempt.

On Thursday she wrote to the secretary of the Department and Community Services, Graeme Head, criticising SIRA for failing to update participants on the report’s findings.

“In my opinion it is simply not good enough for SIRA to call this special inquiry, retraumatise already extremely traumatised workers such as myself being involved in the inquiry, and then to once again ignore me and fellow participants in our attempts to follow up on the findings of the inquiry we gave written and/or oral submissions in,” she said.

In a statement, a spokesperson for the Department of Customer Service, which oversees SIRA, said the report recommended reforms to improve how it handles complaints, and “ensure compliance with workers’ compensation legislation, in relation to complaints by people injured at work”.

“These are sensitive and complex complaints in relation to workers’ compensation and motor accidents and are being worked through carefully, with a view to the report being tabled in parliament when the work is complete,” the spokesperson said.

Greens MP Abigail Boyd said the payouts were evidence of how an “adversarial and hostile” workers’ compensation scheme was “itself directly responsible for harm”.

“This hostile approach to injured workers is a false economy. It causes needless pain and suffering at the expense of the worker and ultimately ends up costing the state and employers more,” she said.

It comes ahead of Mookhey’s appearance at a one-day parliamentary inquiry reviewing his proposed overhaul of workers’ compensation laws, which have angered unions, medical experts and lawyers.

The government has argued reforms to the system – which include changes experts say would make it next to impossible for people who suffer psychological injures to claim workers’ compensation – are necessary because of the perilous state of icare.

On Friday Mookhey will warn that icare’s financial situation has become dire, and in a dramatic escalation will issue an ultimatum to MPs by saying he will no longer issue “top-up” payments to the Treasury Managed Fund – which covers public servants – unless the parliament passes the reforms.

In a bid to convince MPs to support the changes, Mookhey will warn the committee icare’s finances have continued to decline over the past 12 months, and that “absent reform” it will “plunge further into deficit” when the scheme is revalued at the end of June.

“Fast deterioration has real implications for sustainability of the scheme,” he will tell the hearing.

“Put simply – you can have the best workers’ compensation scheme in the world on paper. If it has no money it helps no one.”

Mookhey will say the Treasury Managed Fund – which covers insurance for the public service – is due to suffer another $2.6 billion writedown in the June budget.

The injection of funds into the TMF has long been a bugbear of Mookhey’s, who repeatedly criticised the former government for paying “bailouts” into the fund. He has been frustrated at having to pay $1.2 billion into the fund since Labor was elected to meet funding requirements that say the value of the schemes’ assets must be at least 105 per cent of the value of their liabilities.

Those funding requirements are self-imposed, however, and the characterisation of the injections as “bailouts” in the past has been criticised, since they represent the government’s own liabilities.

If you or anyone you know needs help, call SANE on 1800 187 263 (and see sane.org), Lifeline on 13 11 14 (and see lifeline.org.au) or Beyond Blue on 1300 22 4636 (and see beyondblue.org.au).

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